Delivery and a take-home meal deal drove a lot more customers to Olive Garden this spring.
Same-store sales at the Italian casual-dining chain spiked 6.9% during the three months ended May 25, marking the brand’s best same-store sales performance since the last quarter of 2022. It included a nearly 3% traffic increase.
Executives cited the success of a buy one, take one promotion that ran for five weeks starting in mid-March. The offer allowed customers to buy an in-store meal starting at $14.99 and get a free chilled meal to take home.
Olive Garden hadn’t offered the promotion in five years. Its return is part of a stepped-up focus on affordability at the brand since the pandemic. The chain has kept its menu prices lower than inflation, and it has invested in other limited-time specials, such as its popular Never-Ending Pasta Bowl, in an effort to appeal to price-conscious consumers.
The chain has had mixed results over the past several quarters, including a 2.9% same-store sales decline in the same quarter a year ago. But the emphasis on affordability appears to be taking hold. The chain’s same-store sales outpaced the rest of the industry by nearly 4 points this past quarter, according to Black Box Intelligence benchmarks.
And the brand says it will continue leaning into affordability. It plans to keep prices down while also adding more lower-priced items to the menu.
“If you go back to during COVID, we were pushed very hard to take a lot more pricing when everybody else was, and we didn't, and that is paying dividends, and so, we've invested in price,” CFO Raj Vennam said of the chain’s strategy.
Also working in Olive Garden’s favor is the addition of a new sales channel in delivery. Its white-labeled delivery offering with Uber has become a significant sales driver, accounting for 3.5% of sales in the quarter. About 40% to 50% of those sales were incremental, and takeout sales overall rose 20% year over year.
Toward the end of the quarter, the chain began advertising delivery on TV and elsewhere. Average weekly deliveries doubled in the last two weeks of the period.
The chain’s delivery customers tend to be younger and slightly more affluent, and they are visiting more frequently than dine-in customers, CEO Rick Cardenas said.
Olive Garden parent Darden Restaurants had long resisted third-party delivery, preferring to serve customers in its restaurants and control the experience. But customers were asking for it, so it came up with a solution that allows it to offer delivery on its website with orders picked up curbside by Uber drivers.
Given the encouraging results, Darden is now looking to bring delivery to some of its other brands. As of last week, it’s available at all but eight Cheddar’s Scratch Kitchen restaurants, and it has its next brand in mind, though that will probably not start until next year, Cardenas said.
Olive Garden’s strong performance is part of an industrywide upswing at casual-dining chains to start the year. BJ’s Restaurants, Red Robin and Cracker Barrel all reported surprisingly good quarters, while segment leaders Texas Roadhouse and Chili’s continue to see strong demand.
It comes after a difficult year for the casual-dining category in which stalwarts such as Red Lobster, TGI Fridays and Hooters filed for bankruptcy.
But Cardenas said consumers are starting to see the value of full-service restaurants as menu prices continue to rise, particularly at limited-service brands.
“What’s happening right now is that consumers are figuring out that casual dining is a great value and so they’re coming to casual dining more,” he said. “Consumers want to go out and spend their hard-earned money, and we think we’re taking some wallet share from fast food and fast casual.”
Olive Garden’s momentum has continued into June, executives said. But they are keeping a rather conservative outlook for the next 12 months. Darden expects companywide same-store sales growth of 2% to 3.5%. The forecast factors in ongoing macroeconomic uncertainty as well as the fact that the company will be lapping a strong performance a year from now.
Also on Friday, Darden announced a slew of leadership changes at several of its brands.
Olive Garden President Dan Kiernan plans to retire on Aug. 31 after 33 years with Darden. He’ll be replaced by John Wilkerson, who is currently president of Cheddar’s Scratch Kitchen. Wilkerson has been with Darden for more than 30 years, and has led Cheddar’s since 2018.
Wilkerson will be replaced by Mark Cooper, president of Seasons 52 and Bahama Breeze. Laurie Casler, Seasons 52’s operations chief, will become president of Seasons 52.
Meanwhile, Thomas Hall was named president of Chuy’s, Darden’s recent acquisition. He has been EVP of operations for LongHorn Steakhouse for seven years.
Same-store sales growth at Darden's other brands was:
LongHorn Steakhouse: 6.7%
Fine dining: negative 3.3%
Other brands: 1.2%
Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.